Wall Street strategists are more bearish toward stocks than at any time in the last five years, and that's a good sign for the equities market, says Savita Subramanian, head of equity and quantitative strategy for Bank of America Merrill Lynch.

BofA measures bearishness by the weighting Wall Street strategists recommend for stocks. In April, strategists suggested that investors allocate 52.2 percent of their portfolios to stocks, down from 54.1 percent in March, the first decline in six months.

That compares to a typical historical weighting of 60 to 65 percent, Subramanian wrote in a report obtained by USA Today and MarketWatch.

Editor's Note: 38 Trades That Could Turn $1,000 Into $49,000

"Given the contrarian nature of this indicator, we remain encouraged by Wall Street’s ongoing lack of optimism and the fact that strategists are still recommending that investors significantly underweight equities," she said.

"Even though the S&P 500 has risen by over 35 percent since sentiment bottomed in 2012, history suggests that strong equity returns can last for years after the indicator troughs."

Indeed, in prior times when strategists were this bearish on stocks, the market rose in the following 12 months, 97 percent of the time, Subramanian said.

She's not the only stock bull.

Adam Parker, Morgan Stanley's chief U.S. equity strategist, has an official year-end target of 2,014 for the S&P 500. But if the economy strengthens the index could soar another 20 percent, he told CNBC Tuesday. That would send the S&P 500 to 2,254 from Tuesday's close of 1,878.33. The index ended Friday at 1881.14.

The S&P 500 and Dow Jones industrial average stood within 1 percent of their record highs Friday.

Editor's Note: 38 Trades That Could Turn $1,000 Into $49,000

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